Aurora Davidson - CFO & EVP Robert Henderson - CEO & President

John Polcari - New York

Thank you. Welcome to the second quarter 2018 investor conference call of Amerigo Resources.

I am Aurora Davidson, Executive Vice President and Chief Financial Officer. Before we begin the presentation, let me caution you that our comments and discussions will include forward-looking information within the meaning of applicable securities legislation.

Forward-looking information will include, among other things, forecasts and projections about our copper production for the year, which involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from such forecast and projections. Therefore, although we believe that anticipated future results, performance or achievements expressed or implied by the forward-looking information are based on reasonable assumptions and expectations, you should not place undue reliance on such forward-looking information.

We direct you to our press release issued on July 31, and our other documents filed with the securities authorities in Canada, including our annual information Form under the heading, Description of the Business Risk Factors. This document describes the material factors and assumptions that were applied in drawing the conclusions and making the forecast and projections as reflected in the forward-looking information and the material factors that could cause actual results, performance or achievements to differ materially.

Except as required by law, we undertake no obligation to update or revise any forward-looking information made in this presentation. Rob Henderson, the Company's President and Chief Executive Officer, will now provide an operational and corporate update.

Thank you, Aurora, and thank you everyone for joining the call. Our second quarter performance this year has exceeded our expectations and our financial performance was very strong, thanks mainly to our good copper price.

As I mentioned in our press release, this would greatly support our efforts in successfully executing the expansion projects at MVC. Amerigo's quarterly earnings increased to $2.7 million up from $1.2 million in the first quarter this year and much better than the loss of $1.7 million reported in Q2 last year.

For the second quarter of this year, our operating cash flow was $6.4 million some 44% higher than a year ago in Q2 2017. This is mainly due to the higher Q2 copper price which increased from 2.59 a year ago to 3.16 a pound.

However as we see today, the copper price is now somewhat lower at around $2.80 per pound and the copper price performance this year has been volatile. However, we remain unhedged and we support the view of Scotiabank that's despite obvious demand concerns related to the escalating global trade war, the fundamental picture of copper remains generally positive, with tightening markets largely driven by supply side underinvestment.

Chile remains a stable jurisdiction. However, unions at mine sites continue to aggressively demand large bonuses and strikes are very likely to negatively affect to end copper production.

MVC's union agreement expire in October next year and therefore we don't expect to see any union disruptions affecting us in the near future. In the quarter, MVC produced £14.7 million of copper at a cash cost of $1.71 per pound and the Q2 production of £14.7 million was on plan and included £9.2 million from Cauquenes and £5.5 million from fresh tailings.

MVC's molybdenum plant produced £0.4 million of moly in the quarter. MVC's cash costs and total costs are slightly higher than a year ago mainly due to a stronger Chilean peso and higher royalties both due to higher copper prices.

These cost increases have been partially offset by the high moly byproduct credits due to the higher molybdenum price. The moly prices remain steady over the quarter at around $12 per pound.

We continue to expect full year production of £65 million to £70 million of copper at an annual cash cost of a $1.45 to $1.60 per pound of copper and the second half of the year we should see additional copper production arising from MVC's Phase 2 expansion projects. Most importantly perhaps we expect unit cost to drop to $1.45 per pound on completion of the projects and thus should see our profit margin improve.

Construction of the Cauquenes expansion project is proceeding well and commissioning of the new plant has started at the end of June. At the end of June, the project was 77% complete.

The new Cyclone plant is in operation and is delivering condition feed material for the new flotation cells. Commissioning of the new rougher flotation circuit is expected to commence this month in August and the initial concentrates will be processed in the existing cleaner flotation circuit.

The new cleaner flotation circuit is expected to be ready in September and then production of additional copper from MVC is expected to increase steadily. The new concentrator regrind mill in China is late and plans are in place at MVC to temporarily operate without this equipment.

In Q4 we expect the project to be complete and delivering £85 million to £90 million pounds of copper per annum at a cash cost of a $1.45 per pound. So our key objectives in 2018 remain first to deliver on guidance of £65 million to £70 million of copper.

Second to complete construction of the second phase of the Cauquenes expansion in Q3 and then ramp up smoothly to full production in Q4. The third objective to ensure MVC’s liquidity and continue to pay down debt.

We plan to draw down the remaining Phase 2 expansion loan and at the end of the year maintain our total borrowings at $67.5 million. Over the last three years, we made a substantial investment in MVC during a low in the copper price cycle and I continue to believe we are very well positioned to take advantage of future increases in copper price.

I’ll now hand over to Aurora to discuss the financials.

Thank you, Rob. As is expected the second quarter of 2018 was again a stable quarter with operational performance on target and financial performance strengthened by robust copper prices.

The average LME price in the quarter was $3.12 compared to $3.16 in Q1. The stronger copper price in the quarter was $3.16 in June which is a provisional price we use to book at Q2 production.

Final prices for Q2 production will be the average LME price for July which was actually $2.83 and then the prices for August and September. As we always discuss, our financial results are very sensitive to changes in copper prices both in terms of the provisional prices we use to book quarterly production and in respect of the final price adjustments that are realized one quarter ahead of the production of the actual production.

A 10% increase or decrease in copper price from the $3.16 provisional price we used in Q2 would translate into a $4.9 million revenue adjustment in Q3. In Q2 production and cash cost targets were met and Amerigo's annual guidance was maintained.

As Robert mentioned, the Cauquenes Phase 2 expansion is progressing as planned. Results for the quarter included net income of $2.7 million or $0.02 per share and cash flow generated from operations before working capital changes of $6.4 million.

Including changes in working capital, the company generated cash of $1.8 million it received $8.8 million in debt proceeds for the Phase 2 expansion and paid $10 million for capital investment including Phase 2 and sustaining CapEx. We also made debt repayments of $8.4 million just in Q2.

The company’s standing cash position was $21.4 million at June 30. The Chilean peso relations to the U.S.

dollar saw a bit of a cool down in Q2. The average conversion rate to a U.S.

dollar was 621 pesos compared to 602 pesos in Q1. In Q2 costs were once again affected by $600,000 and a higher than expected power cost to higher power transmission charges from a change in regulation that was introduced in January.

These regulations were changed effective July to a position that is quite similar to the one in place last December. With the close of the second quarter, the company is well positioned for a stronger second half of the year as the Phase 2 expansion comes online.

As we have mentioned in our filings, we have continued to draw the remaining $8.7 million in the Cauquenes Phase 2 loan in Q3. We anticipate that the El Teniente debt will be fully repaid by September and further loan repayments from the Phase 1 loan will take place in December.

With this payments, our anticipated debt position at year end will be $67.5 million. Rob and I will now take questions from call participants.

Just a few quick questions. What would you say though one or two key elements that are leading to the considerable cost reduction in operations or is it and across the board fairly even reduction?

John, yes good question. What we have in the expansion we’re essentially adding on some new process plant so we increased the recovery of copper.

So we really have very few additional operators our grinding cost stay the same, power cost will go up marginally from a few motors. So what we are seeing is essentially these costs side of the equation staying static in terms of dollar terms but the production going up by 40%.

So we see a substantial reduction on the unit cost as a result that’s across the board.

Two other quick questions, the molybdenum plant that you’re expanding or restarting when is that due to be finished?

So the moly plant is going to be complete in October this year. We're doing that in two phases so the rougher plant is in place and operating and now we’re stripping out some of the old plants and putting in a cleaner cells.

We’re keeping the moly plant running by installing the new plant in parallel with the old plant so - we're about half through say rougher cells are in place. Cleaner cells they will be complete in October.

And I know that the strikes that are pending or possibly might take off in August that does a direct impact in terms of labor negotiations or walkouts at the company but have there been instances in the past where some of the other unions have set up picket lines looking for your staff to - out of those lines or expect the strike?

In the prospect that has not happened. What you see in Chile that the unions are typically mine side base so it’s not a national union.

So there is not lot of sympathy strikes going on. So the strike is very local in nature but having said that El Teniente is labor negotiations are due in Q4 this year and they’ve started discussions and El Teniente would you have issues we may well be impacted but historically we haven’t.

And so historically El Teniente has had - it had a number of walkouts but are you saying you haven't had any significant disruptions say in the last decade?

Yes, well the disruptions they have not been significant. We had couple of instances where subcontractors working at El Teniente had some labor actions and they were some road blockades.

But all in all they didn’t affected beyond - probably two or three days of disrupted operation.

So it’s conceivable that this too shall pass?

Obviously it is concern - but we’re just remaining vigilant okay.

And lastly I know that banks had a reserve fund that was looking to be filled to assure them forward payments I believe for obviously there were six months or something six months pay is that bucket filled?

The bucket is filled as up to-date because it currently includes the repayments on let's say December. The first repayment on the Phase 2 loan is scheduled for June 30 of 2019.

So that means that approximately 5.4 million of additional funds have to be placed in the reserve account at December to cover that payment. Our cash flow projections currently show that at current cooper prices we will be able to do that funding without any problem.

So that being the case without any significant changes to the mix or without some disruption cost increases and of course everything else being equal which might be saying something you should have modest to significant free cash flow in 2019 with copper prices cooperating?

Yes, at current copper prices we don’t anticipate any liquidity problem John.

And brings up another point and what’s the downside again on the royalty payments in terms of they become de minimis at was it $2 copper or?

At 195 copper that the formula no longer applies and so that is the key spot.

Thank you very much. We appreciate you joining us for the Q2 investor conference call and we look forward to our discussion with you three months down the line, once the Phase 2 expansion is complete.

Thank you.